Market Reactions to Iranian Conflict and U.S. Oil Production Dynamics

I have said to many in the last week that even though pricing remained elevated, we appeared to be moving in the right direction. For thirty days the markets have been affected by the exposure of key structural supply elements of our global economy, some say a necessary byproduct of dismantling the Iranian regime. Though the last week or so appeared to be entering into a détente phase as ships started moving and what was perceived as high level talks starting to happen. Most on Monday night were expecting an update with definitive timelines on the end of the Iranian conflict. That didn’t exactly play out like we would have expected….. Instead, the Presidents address gave no clear end date or even a resolution pathway. Instead comparing the conflict timeframe to World Wars, stating we will continue to show force and if countries that need oil from the area, its up to them to go get it. Traders immediately reacted pushing up futures today over $.40 at this time. While we have seen some wild market swings lately, I think this one may take a wee bit to get pulled off. Still, long term, I would think with US production ramped up to capture higher pricing and demand taking a natural hit because of higher pricing, we have to settle down eventually. It is just a matter of when. Either way know DKB is working around the clock ensuring your operation continues to run.